Mike Isaac

Recent Posts by Mike Isaac

Zynga Beats by a Nickel as Monthly Users Decline

Zynga’s first quarter numbers are in, and despite a slim beat of analysts’ estimates, revenue and user declines aren’t looking pretty.

The company posted earnings per share of one cent on revenue of $264 million. Consensus on the Street expected Zynga to post a loss of four cents per share on revenue of $209.8 million. Still, that’s a decline of 18 percent year over year compared to the $321 million in revenue the company claimed in Q1 of 2012.

“2013 will continue to be a transition year as we face the challenging environment on the web and invest in developing the leading franchises and network across web and mobile platforms,” said Mark Pincus, CEO and founder of Zynga, in a statement, “and offer our 253 million monthly players a connected experience that can follow them from work to school to home and anywhere in between.”

The most important thing to note there is that 253 million monthly active users stat. It’s down from the nearly 300 million MAUs the company reported as of last earnings.

Also worth noting: Zynga’s daily active users — or DAUs — are at 52 million, an all-time low for the company.

“Users are migrating to mobile, and our marketshare on the Web is larger than it is on mobile,” Zynga chief revenue officer Barry Cottle told AllThingsD, in an interview. “As we look at it, it’s a natural part of the transition we knew was going to happen.”

“When we made the pivot last summer, the transition was happening really very fast, so we had to reorganize our studios quickly to move towards mobile,” Cottle said.

That’s why we’ve seen the closure and consolidation of some of Zynga’s outfits in areas like Maryland and Austin earlier this year, and why we’ll see the company shutter at least four more games in the coming year, focusing on games that are more geared towards a mobile audience.

“We made some decisions on a few Web games that we decided to shut down, which would have propped revenue up but wouldn’t have gone in direction we want to go in,” Cottle said. “It may have been a great short-term decision, but not good for us in the long-term.”

In February, Zynga was eager to remind everyone that nearly a quarter of its users — around 72 million of them — were accessing the company’s games via mobile devices on a monthly basis. Update 3:31 PT: The breakdown wasn’t apparent from the print, but Pincus stated on the conference call that Zynga’s most recent mobile MAU count is at 65 million. Again, that’s down from the 72 million reported last quarter, tracking with the dip in overall sequential MAUs.

“The good news is that we’re not nowhere. We’re sitting in a very nice place, in particular as it amounts to engagement,” Cottle said. “We’re seeing users spend 11.2 billion minutes per month playing our games.”

Shares of Zynga dropped to $2.93 in after-hours trading by 12.5 percent.

The key word, as CEO Pincus repeated on the call this afternoon, was “transition.” I imagine it more like the company saying, ‘we know we’re tanking right now — just stick with us.’

Latest Video

View all videos »

Search »

Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work